Can Flowserve (FLS) Surprise This Earnings Season? - Analyst Blog

Flowserve Corp. FLS is set to report its first-quarter 2014 results on Apr 23. The company delivered a positive surprise of 10% in the last quarter. Let's see how things are shaping up for this announcement.

Growth Factors in the Past Quarter

The company continued to benefit from management's consistent focus on strengthening its core businesses, namely, Engineered Product Division, Industrial Product Division and Flow Control Division. Recent contract wins were also a positive.

Recently, Flowserve received several key contracts in its core business from the Germany-based Lichterfelde Cogeneration Power Plant. Per the contract, Flowserve will be providing diverse services for the company's major power stations. Apart from catering to the entire pumping station requirements, the deal also requires Flowserve to provide diverse support services for the complete life-cycle of the pumps including installation, initiation and maintenance.

Prior to this, Flowserve also received a contract to supply tailor-made water injection and liquid transfer pumps to Sabah Shell Petroleum Company's Malikai oilfield project.

Morever, in March, the company announced that it has divested the Naval OY business unit including its all-welded ball valve product line to Finnish valve manufacturer, Vexve OY. These valves catered to a niche market that were highly cyclical in nature and failed to generate the required results for Flowserve. Post the sell-off, Flowserve intends to concentrate and build up on its core portfolio comprising flow control equipment, such as pumps, valves and seals, for critical service applications.

Earnings Whispers?

Our proven model does not conclusively show that Flowserve is likely to beat estimates this quarter. This is because a stock needs to have both positive Earnings ESP and Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below:

Zacks ESP: Flowserve has a Zacks ESP of 0.00%.

Zacks Rank: Flowserve's Zacks Rank #3 lowers the predictive power of ESP because the Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Lincoln Electric Holdings Inc. LECO, with Earnings ESP of +1.11% and a Zacks Rank #1 (Strong Buy).

United Rentals, Inc. URI, with Earnings ESP of +3.52% and a Zacks #2 Rank (Buy).

Colfax Corporation CFX, with Earnings ESP of +4.65% and a Zacks Rank #2.